05/17/2008 GAAS:272:08 FOR IMMEDIATE RELEASE Print Version | En Español | Email / Share
Guest Host David Crane Discusses May Revision in Governor’s Weekly Radio Address
English and Spanish transcripts of Governor Arnold Schwarzenegger's weekly radio address, hosted this week by David Crane, special advisor to the Governor for jobs and economic growth, are below.
English:
The 3-minute, 27-second address is available at http://gov.ca.gov/mp3/press/GovAddressMayRevise051608_mus.mp3. The file is 1.38 MB.
A "clean" version of the address is available at http://gov.ca.gov/mp3/press/GovAddressMay Revise051608.mp3. The file is 1.36 MB.
Spanish:
The 4-minute, 40-second address is available at http://gov.ca.gov/mp3/press/GovAddressMayRevise051608_span_mus.mp3. The file is 1.87 MB.
A "clean" version of the address is available at http://gov.ca.gov/mp3/press/GovAddressMatRevise051608_span_dry.mp3. The file is 1.85 MB.
DAVID CRANE:
Hi, this is David Crane, special advisor to Governor Schwarzenegger, filling in for the Governor with another California Report.
On Wednesday, the Governor presented his revised budget proposal to the legislature, which included a plan to end the boom-and-bust cycle that has plagued California's budget for decades.
Over the long-term, California's revenues are always increasing and we have sufficient funding for our needs.
In fact, our average annual revenue growth over the last 10 years is about five percent and revenue from personal income taxes, which make up half of our revenue, has grown at an even faster rate.
But in the short-term, that revenue is extremely volatile. One year, for example, revenues from personal income taxes grew 28 percent. But two years later they were down 25 percent.
Households and businesses know to keep their spending in line with their long term revenue. But when times are good in Sacramento, the state spends every penny as if times will always stay good. We don't set anything aside for when revenues dip, as they inevitably do.
So the Governor has proposed a constitutional amendment to create a rainy-day fund.
It would force the government to save money in above-average years, so we have enough for below-average years.
Had we had such a fund in place the state could've avoided the deficit problems of the last decade.
And if such a fund were in place today, we could draw down billions of dollars to help close the 08-09 deficit.
But we don't yet have such a fund. So under the Governor's innovative plan, we establish one immediately so we can draw off of it this year.
And the best way to fill that fund is to modernize our lottery and then sell its increased revenues to investors in exchange for cash today.
The Governor chose the Lottery for this purpose because it has been an underperforming asset.
It is old and outdated and weighed down by numerous statutory restrictions and limitations.
In fact, its performance ranks dead last among the 10 largest lottery states.
Modernizing its technology and improving its flexibility will boost performance and allow the Lottery to better compete. After all, the voters own the Lottery. They should get the best performance possible from their asset.
Then, the Governor would ask voters to sell the Lottery's higher revenues so we can fill up the rainy-day fund now.
This would generate $15 billion for that fund over the next three years. It's not a loan. We don't have any obligation to repay. It's a sale and every penny goes to no other purpose than to jump-start our rainy-day fund.
After that we would draw down $5 billion from the fund to help close the deficit for 2008-09.
We would also structure this to ensure that education still gets its fair share of Lottery proceeds.
The Governor's plan means the state can begin to address the deficit right away with new cash, while also creating the foundation and reserve to smooth out future budgets.
This extra revenue, along with the spending cuts the Governor proposes, allows us to close the budget gap, without raising taxes or borrowing money.
It also allows us to fully fund Proposition 98, keep our state parks open and avoid releasing prisoners early.
This is a tough budget year, but the Governor's proposal is a reasonable approach to addressing California's needs, both now and into the future.
On behalf of Governor Schwarzenegger, this is David Crane. Thank you for listening.
